Can Vail deed-restrict 1,000 units in 10 years?
By the numbers
7,209: Total housing units in Vail.
4,758: Housing units used as second homes.
698: Deed-restricted homes.
90 percent: Homes sold since 2010 that were purchased by second home owners.
Source: Town of Vail
VAIL — Housing here has always been a problem. Now, Vail’s planning staff and members of the town’s housing authority think they have a way to fundamentally change the town’s approach.
At its meeting on Tuesday, the Vail Town Council will get its first in-depth look at a comprehensive housing plan called Vail Housing 2027. That plan sets a bold goal: adding 1,000 units of deed-restricted housing to the town’s inventory in the next decade.
There’s no way to build that many units. Even if there was land available — and there isn’t — not even a town with Vail’s substantial financial resources could afford to build that much housing.
The proposed solution is still expensive, but fairly simple. The plan calls for putting the town of Vail in the business of buying deed restrictions on existing homes and apartments.
Longtime town resident Steve Lindstrom is the chairman of the Vail Housing Authority. He’s been on that volunteer board for a number of years.
In that position, Lindstrom and other authority board members have studied what other resort towns are doing to help their own housing problems. Those solutions are all similar, in that they use dedicated funding to build for-sale and rental housing.
“It’s time to break that mold and do something else,” Lindstrom said. “We need to be more proactive.”
The idea is to use town money to put deed restrictions on existing homes and rental units.
Which leads to a brief explanation of what a deed restriction is and how it works. In its most simple form, the most common deed restrictions put appreciation caps on homes. The restrictions also include requirements for people who live in those units must work in their communities.
In Vail, the requirement is that residents must work a minimum of 30 hours per week somewhere in Eagle County.
The end result is that homes and apartments are occupied by full-time residents, and that those units aren’t used as either second homes or short-term rental units.
A more simple system
Vail Housing 2027 simplifies the idea of deed restriction. The new system would only require working at least 30 hours per week in the county. The appreciation caps would go away.
The way the system would hold down prices for future buyers — the point of the appreciation caps — is by essentially creating a second real estate market in town.
“It’s as basic as we can do it,” Lindstrom said. “It’s as market-oriented as it can be … We let the market figure out values.”
There’s more to it, but here’s an example of how the town could purchase a deed restriction:
Let’s say a home comes on the market in Vail. A prospective buyer — a local resident or family — can afford the mortgage payment, but not the down payment. The town could provide that down payment in exchange for a deed restriction. Then, when the buyers decided to move on, the deed restriction would limit the pool of potential buyers to current residents.
Vail Community Development Department Director George Ruther said the proposed plan changes both the process and approach to creating more housing dedicated to full-time residents.
That’s important, since the town’s current housing stock is rapidly being snapped up by second-home buyers.
According to town research, 90 percent of all private homes sold in town since 2010 have gone to people who won’t live in those units full-time. And, as of this year, there are fewer than 1,800 units in town occupied by full-time residents.
That’s the goal. But, Lindstrom said, Vail Housing 2027 depends on three elements for success: A goal, the means to reach that goal and methods to accomplish the goal.
How to pay for it
In this case, “means” means money. The plan proposes for 2017 using all of the town’s current housing fund — $3.2 million — plus another $500,000. The cost rises to $5 million per year for the next three years.
Vail doesn’t have a source of housing funds — the current account has been filled in bits and pieces over the course of many years — so the funds at first would have to come out of a combination of the town’s capital projects fund and the general fund.
The good news is that the town’s reserve funds are strong — there’s more than $30 million in that account now.
“We believe the town is well-positioned to take on this challenge,” Ruther said.
Lindstrom said some initial success could help create the political will for town voters to agree to some kind of tax increase to fund future years.
And there seems to be the will to tackle the problem.
The town’s 2016 community survey showed residents’ top priority for Vail is to focus on housing.
There also seems to be demand. Ruther said the town has a list of more than 160 people who expressed interest in a for-sale housing project in West Vail. There won’t be more than 50 units available there.
“That shows us there’s demand,” Ruther said.
The town also has a long — and mostly successful — track record when it comes to tackling big issues, Lindstrom said. There’s also an acknowledgement by town officials that housing is as much a part of the community’s infrastructure as street maintenance or fire protection.
“If this is a top priority (for residents), we should have the resources,” Lindstrom said.
Vail Daily Business Editor Scott Miller can be reached at 970-748-2930, firstname.lastname@example.org and @scottnmiller.